Parents' Perspective (other students as well)

Parents Forum
1

Okay, so here is some background information:

I am currently a student who is majoring in accounting (junior year, second semester)
I commute to my university
I transferred to my university as a junior from community college
I live with my parents (no r/b or rent)
CURRENT STUDENT DEBT: ZERO
I plan on pursuing a master’s degree and taking the CPA exam to become certified
Estimated debt upon graduation (undergrad) : $0 - $5,000

So I was “fortunate” enough to go to community college my first two years and pass by with no debt. My credits all transferred to my current 4 year, where I am now in my second semester (junior year) with no debt. For my senior year, I assume that I will be graduating without any debt.
My parents started a mutual fund when I was born that really helped pay for my first two years in community college. For graduation (high school), the money my parents gave me went towards college, which also helped for my first two years. My first semester at my 4 year, my grandfather paid my tuition (long story), and then my parents paid the full amount for my second (current) semester, totaling about $4,500.

So all in all, my parents may have paid ~$10,000 for my education thus far (likely less). For next year, my grandmother has offered to pay my tuition for one semester, so by the time I graduate, my parents may have put ~$15,000 into my education.

PLEASE do not think I am some snotty kid; I really really REALLY appreciate what my parents have done for me. Just hear me out, and don’t tell me that I am being a jerk; give me valuable feedback.

So as I said, I expect to come out of my undergrad with barely any debt, if any at all. I decided to commute so my parents would not have to co-sign on loans and also, I live next to a university with a stellar accounting program. However, I would love to go away for graduate school. I would never take on loan debt for an absurd amount, but I would if it was reasonable.

By the end of my college career, I am hoping to have a master’s in accounting degree and be CPA certified, which I am assuming I will be able to land a good job. If I were to take out loan debt of ~$25k, I feel like that would be pretty reasonable. I feel like going to a better school will just give me an overall better experience and better opportunities, so the debt would be justified.

My parents however are pushing me to stay at the university I currently am attending. Although it is good, I want to attend something better. I know my mom would co-sign a loan (if reasonable), but my dad is so against it.

SO PARENTS: what would you do? If your child got into a pretty great grad school for accounting (say, UTexas - Austin) and they were fortunate enough to attend for around 25,000, then would you co-sign if your child had no debt after their undergrad?

Thanks!!

2

This is not a recommendation, however, you can borrow federal loans as a grad student without your parents help, al long as you dont have bad credit. So you wouldnt need them. The rate is not as good as some private loans, but it comes with some additional protections that private loans dont have , such as write off in the case of death/disability. Accounting is a pretty good career. If you can limit your total loan debt to 25k for undergrad and grad school, I think that is manageable debt.

3

Does your state require a master’s degree for CPA licensing? Some states just require 150 semester hour credits including a bachelor’s degree or higher. If your state has a requirement like that, then a less expensive way may be to take additional elective courses at CCs (before or after bachelor’s degree graduation) to reach 150 semester hour credits.

4

Public accounting is not a field where the prestige of your graduate program matters in particular. If you want to make your case to your parents why they should support taking out a (to their eyes, completely unnecessary) $25,000 loan. Apart from some differences in on-campus recruiting ability, one accredited MSA/MAcc program is as good as any other as far as I know. I would definitely try to do some research to explain fully what you will get from the school you want that you can’t get from the school that you don’t want.

I probably would do as partyof5 suggest and require that the student borrow the max in federal Stafford loans as an independent student in this situation though. If you borrow the full $20,500, you can probably make up the rest in savings from a summer internship / job between undergrad and grad or working on campus. If you don’t want that, then it might be worthwhile to do additional investigation to see if there are ways you can defray the costs a bit; some master’s programs will hire students as teaching assistants or graduate assistants and waive at least some credit hours of tuition for them.

I get the desire to kind of ‘splurge’ a bit on your grad program since it sounds like you really buckled down and tried to control costs in your undergraduate years, but ultimately you have to find a way to persuade your parents that going away makes sense. “Overall better experience” is probably too vague to be persuasive especially for your father, but if you can articulate specific reasons then they may be more willing to listen.

5

I feel no parental obligation whatsoever to pay for my kid’s graduate school. They don’t need me to cosign for grad school loans as @partyof5‌ pointed out. At some point, they have to break free of the financial apron strings.

I would expect my kids to not only fund their own grad degree through loans if necessary, but to also get a job to contribute to the household expenses if they were living with me. Do your parents still pay your car, gas, and insurance, cell phone? You should start weaning yourself from your financial dependence now. You can’t expect adolescence to last well into your twenties.

Another alternative is to seek employment after graduation with a company that will fund employees’ advanced degrees. Go to your college career center and speak to a counselor. It might take longer to become a CPA, but you would not only avoid debt, but actually start your career.

I’m with your dad on this one, unless his motivation is just to keep you at your current school and at home.

6

Perhaps you can choose a grad school that funds you to go there. Both of my first year accounting classes were taught by grad students who served as the instructors (rather than the TAs) for the course. One was getting a PhD but the other was getting a masters in accounting. This was at a state flagship. Look around at different grad programs to see which offer funding to grad students as instructors or as TAs.

7

PS: 25k in loans for a CPA is reasonable, I think, especially if you live frugally your first few years on the job and pay it down quickly, which is what I would recommend. Work during grad school and pay some of that accruing interest. But hey, you’ll be an accountant! I’m sure you’ll figure out the best way. :slight_smile:

8

For grad school, you can take out a grad plus loan up to the full cost of attendance…without your parent permission.

You can also take $20,000 a year in unsubsidized Direct Loans.

You don’t need your parent permission to do this.

9

If you do plan on doing this, make sure you start building your credit now. Get a student credit card, BUT DONT abuse it. Both of my kids were approved for student discover cards. If you cant get approved, get a prepaid for 6 months, then re-apply for a regular credit card. At any rate, it would help if you had credit in your name.

10

You really need to check to check the CPA requirements. My H obtained his MBA in accounting almost 20 years ago. Aside from the degree and passing the exam, he needed a year of public accounting experience to be certified. He worked his one year in case he ever wanted it, tried but didn’t pass the exam the first time (most didn’t, at least then) but got a great staff accountant position elsewhere. He figured if he ever needed the CPA he could but he hasn’t needed it. He’s now the controller and has turned down offers of promotions.

He had classmates who stopped with their BBA in accounting who needed just one more year of public accounting experience than he did (two years) and the exam to get their certification. They did do it and are very successful.

I think some of those qualifications have changed slightly since then.

Our college did have recruiters come in from the Big 6 accounting firms (now the Big 4) and that was pretty helpful for those who had great grades and recommendations from professors.

If you were my kid, I would probably suggest you either stay at the local college for the MBA or look for a staff accounting job with your BBA and work on the MBA over time while working and living where you are dreaming of. but ultimately its your choice if you are paying.

11

Thank you all for the responses!

As you know, I have not had to take any loans out thus far, so I did not realize that I was capable of taking out a loan on my own without my parents’ co-signing for grad school. I was aware that some companies will pay for their employee’s graduate courses, however.

My overall plan is this: Get my master’s in accounting, pass the CPA exam, work at a local firm for a few years and pay down my student loan debt while living with mom and dad (pay them rent also), then try and get in with the Big 4. As of right now, I do not have much on my resume, so I am hoping experience will win over a Big 4 employer.

Being that I plan to live with my mom and dad after graduation (we have an in-law apartment), I think I’ll be able to really chip away at any loan debt as well as gain some valuable work experience.

I know it sounds silly, but look at it this way:

You have two candidates: one who went to a suny school (like me) and one who went to, say, the university of illinois - UC. Both have the same credentials. Who is going to raise the eyebrows? I know a lot depends on the interview and if the employer likes you, but the prestige of your university must have some weight in their decision, right?

12

http://www.op.nysed.gov/prof/cpa/cpalic.htm indicates that the NY CPA education requirements are 150 semester hours including either an AACSB accredited master’s degree in accounting, or a bachelor’s degree with specified course work. Look into this carefully, since you may have less expensive options than getting a master’s degree.

13

Well, no it doesn’t. I really think that you should take the time to reach out to your on-campus recruiting office at your current college as well as (if possible) the same office from the school that you want to attend. They should be able to give you a list of on-campus events such as a career fair or ‘Meet the Firms’ night and the firms that actively visit the campus. If there’s a big difference between the opportunities at one campus vs. the other one, that would be a logical reason to favor the more expensive school.

(In general, each recruiting season, the firm estimates how many associates and interns they need/want and send their recruiters out to harvest as many good candidates as possible. They rarely (if ever) can afford to categorically rule out any school based on US News rankings especially since those rankings don’t always capture a school’s reputation within a given industry or region.)

I think your plan is solid and you would probably be fine at either school. You now know that you can borrow the funds needed for graduate school if you do choose the more expensive school. I can’t say that going to the more expensive school is the best financial move but in all honesty I don’t think it’s a crazy idea either - not everything necessarily has to be about saving money and since you seem to have a healthy attitude of what the debt means it’s not as worrisome as some of the other people who come on here and want to borrow $30K a year for undergrad and then want to go to medical school and study abroad on Mars while at the same time starting a hedge fund.

14

My nephew attended a local college as a commuter, living at home all four years to save money. Like you, he majored in accounting. He had great internships during college, which got him a job offer at graduation from a top national accounting firm. He is working for them and they are paying for him to get his masters degree while sitting for the CPA exam (he has passed 3 out of 4 of the sections so far). There may be jobs like this in your area, too.

15

Let me suggest this: If you really want to go to a high-prestige accounting program, and use that credential get a job at a high-prestige international accounting firm, the last thing you want to do is work for a small firm and live with your parents for 3-4 years after graduate school. You want to get hired right out of your prestigious graduate program. And that’s when the big-4 firm wants to hire you; I don’t think they hire a lot of people who have been working for years for a small-potatoes firm. You should get a local job right out of college, work for a few years, and then go to graduate school, and look for the big-time job from graduate school. (You’ll get a lot more out of graduate school that way, too.)

16

I don’t really understand why the OP needs to go right from college into a masters program to get a CPA. Business masters programs tend to prefer students have worked first. JHS above has great advice:

17

Probably a perceived need to get a master’s degree as the educational prerequisite for CPA, but there are alternative ways to reach the needed 150 credits that may be less expensive.

18

Accounting is a little different from other business masters programs. Students often get their masters right after UG. Your best shot at a job in the Big 4 is to be one of the top students WHEREVER you go to school. They will hire right from UG or from a grad program. Go to the school that gives you the best shot at being at the top. Get involved in some type of leadership in UG as well. Looking for a role as a TA is a great idea and helps pay for grad as well as gain skills the Bug 4 will appreciate. Do not however overlook the great regional firms in your area. There are a lot of great accounting opportunities besides the Big 4.

19

Totally agree with JHS on this.

20

I am a CPA and a tax partner with a regional accounting firm. I worked in the tax department for one of the Big 4 firms for five years after graduating from a state flagship with a BS. I passed the exam and became certified before my state moved to the current 150 credit hour requirement most states now have. I progressed to senior and then manager with Deloitte before moving on.

This is my advice:

  1. A Big 4 firm, IMHO, for someone who wants to make the most of a career in accounting, it is where you want to begin if you can get there. You will learn a ton and it will open the most doors. Even if you don’t want to stay in public accounting forever, or you want to eventually work for a smaller firm, you will accelerate your career progression dramatically the longer you stay and progress in a Big 4 firm. If you move to corporate or a smaller firm you will find that you leapfrog over people that have substantially more years of experience than you have.

  2. If a Big 4 firm is your goal, as others have said you absolutely need to plan for it to be your first job when you graduate.

Here is how it works at these firms. Depending on the size of the office, they are going to hire a certain number of new grads every year for the next busy season. Let’s say they look at the work they are going to have and decide they need 10 new hires next year. In reality, they already have three of the ten spots filled by those who interned with them last year and made a good impression. A couple of more spots will get filled when a partner pushes for someone (let’s say an important client wants newly graduated son to get a shot) or another local office passes along a strong recruit who wants to move back home to their hometown. For the remaining five spots, most of those are going to get filled from the large public universities nearest to their own market where they are going on campus to recruit year after year.

When they hire this group of ten, it is understood that 10 years from now they will only have room for one or two of those folks by that time. One way or another, the rest are going to move on to corporate positions, often with clients, or with smaller firms. It is an up or out culture. From the moment you get there, there is a weeding out process going on, with those ten folks competing with each other for fewer spots at the next higher level. Each year there is a new group of 10 (or more) folks coming behind them. There just isn’t much room for an experienced hire from a smaller firm, who is an unknown commodity, to squeeze his or her way in there. I am not saying it can’t happen. One year they may have a lot of new work, or a more people that leave on their own than they expected, so they are in a pinch and have to make a couple of experienced hires. But if you count on that understand you are cutting your odds in a huge way. You should be aiming for the wide gate rather than the narrow one.

  1. If Big 4 firm or public accounting in general is your goal, rethink whether you want to invest a significant amount of money or time in a masters degree.

In public accounting, the masters degree in accounting or tax, or the traditional MBA, doesn’t give you much of an edge, if there is one at all. Everything is focused on passing the exam and getting certified however you can get there, which is abut getting 150 credit hours. Then it is about your performance. Once you are working it will become increasingly irrelevant where you went to school and what degrees you have. The credential that matters is the CPA credential, at least in public accounting. If you want to go the large corporate route later on (Fortune 500), the masters degree is more common, because higher levels in a corporate environment you are more and more a business executive and less of a technician. But in public accounting, where the entire operation revolves around selling technical skills and knowledge, again there just isn’t as much importance attached to it.

  1. If working for a Big 4 firm in a certain city is your goal, it is more important to come out of the schools that those firms are recruiting from year after year, which are going to be the large flagships in near proximity to that local office. This is way more important than going to a more prestigious program. Wherever you graduate from, in a public accounting context your best chance of getting hired is going to be by the local office of the firm in the city you are going to school in. If you tell that person you want to work for the firm, but in another office in your hometown or some other city, it isn’t out of the question. But think about it. When he or she came to talk to you, what brought him there was to fill the five spots mentioned above that he or she had to fill. You aren’t interested in helping him with that. You are asking him to do you a favor and call someone he may not even know at all in another office. And that guy is out at the local U in his own market talking to someone like you. If you are truly the best of the best, yeah this often will still work out for you. If you are borderline, I can tell you it rarely does. Once again, think wide gate vs. narrow gate.

I can imagine this is hardly intuitive at this point for you, but in this field (public accounting) at least, the rankings and reputation of the college doesn’t hold nearly the importance that you would typically think that it does.

I hope this advice helps you in some way. Best of luck to you.